In May 2023, a recommendation was put forth by the UK Treasury Committee to classify the act of trading and investing in cryptocurrencies under the purview of gambling regulation. The rationale for this suggestion stems from the committee’s observation that cryptocurrencies share numerous resemblances with gambling regarding associated risks.
The Treasury rejected the recommendations. Nevertheless, efforts are underway to establish a comprehensive regulatory framework for cryptocurrencies in the United Kingdom. Numerous regulations and appeals for additional measures resemble those about gambling within the nation. Hence, delving deeper into the endeavors of the regulatory entities, namely the UK Gambling Commission (UKGC) and the Financial Conduct Authority (FCA), proves intriguing.
Government Evaluation and White Paper on Gambling
The white paper on the review of the Gambling Act 2005 by the UK Government presented a diverse range of recommendations for alterations to the regulated gambling market within the nation. The above regulations include gambling operators possessing a UKGC license and individuals affiliated with the GAMSTOP scheme. Non-Gamstop casinos, licensed in various global jurisdictions, offer distinct customer safeguards, diverging from conventional norms.
The recommendations outlined in the white paper, which are anticipated to have a regulatory impact, encompass the subsequent aspects:
- Introducing a measure to limit the upper threshold for wagering on digital slot spins.
- Performing “discreet verifications” upon individuals experiencing a loss of a predetermined sum of funds in gambling.
- Examining complimentary wagers and incentives to ascertain their non-intrusive impact on patrons.
- Establishing an autonomous gambling ombudsperson to address player grievances.
In alignment with the suggestions outlined in the white paper, a recent accord among Premier League clubs endeavors to fortify safeguards against the perils associated with problem gambling. From the 2025/26 season onwards, the clubs have collectively decided to cease front-of-shirt sponsorship by gambling firms. This decision has been made in light of concerns surrounding problem gambling and its potential impact on individuals, particularly the younger demographic.
Similar Rules and Suggestions Have Been Made for Cryptocurrency
In light of the Treasury’s choice to refrain from regulating cryptocurrencies akin to gambling, the sector has recently become the focal point of fresh advertising regulations unveiled by the FCA. These rules resemble gambling regulations in terms of their underlying rationale. The rationale behind this approach is to safeguard individuals from the inherent hazards associated with gambling and the trading and investment of cryptocurrencies.
To the latest regulations set forth by the Financial Conduct Authority (FCA):
- Commencing on the 8th of October, in the year 2023, a new regulation mandates that entities engaged in the promotion of cryptographic assets shall be required to offer a designated period of respite for potential investors.
- The practice of offering referral incentives has been prohibited.
- It is imperative to provide individuals engaging in investment or trading activities with comprehensive risk warnings.
Apparent similarities can be observed in the gambling sector, as it contemplates modifying its bonus structures and incorporates risk warnings and protective guidance in its industry promotions.
Alongside FCA alterations, the Law Commission actively pursues enhanced lucidity within cryptocurrencies. The request has been made by the Commission to establish a distinct classification for cryptocurrencies as an asset category. Additionally, a proposal is to establish a dedicated panel and legal framework explicitly tailored for cryptocurrencies.
Additional resemblances will probably arise as efforts persist in implementing recommendations from the government’s gambling white paper and advancing cryptocurrency regulation. These resemblances occur from the shared objective of safeguarding individuals engaged in gambling, trading, or investing activities.